A special public fund (Cassa Integrazione Guadagni) used to protect workers' income, financed by companies and the state and administered by the National Institute of Social Insurance (INPS) . In cases laid down by law, the Wages Guarantee Fund makes up the pay of employees affected by lay-offs (see suspension of work ) or short-time working , up to 80 per cent. of the lost pay. In industry, the Fund operates through two forms of intervention (ordinary and special), governed by a series of laws of which the main ones are Law No. 1115 of November 5, 1968, Law No. 164 of May 20, 1975, Law No. 675 of August 12, 1977 and more recently, Law No. 223 of July 23, 1991, which greatly reduced the distinction between the two forms. Payments under ordinary intervention are granted by the National Institute of Social Insurance to workers who have been laid off or put on short-time working because of immediate circumstances which cannot be blamed either on the employer or on the employees, or because of temporary market situations; payments under special intervention are granted by the Ministry of Labour and Social Insurance , on the advice of the Interministerial Industrial Policy Committee (CIPI) , to both blue-collar and white-collar workers who have been laid off (and to blue-collar workers put on short-time working) because of company reorganization, restructuring or conversion, or a company's economic difficulties that are of particular social importance as regards local employment. A trade union information and consultation procedure, usually leading to a phase of bargaining, is a prior condition for the admissibility of an employer's request for the Fund's intervention. Devised originally as a means of temporary income protection for employees, in the expectation that the company and its employees would soon resume normal activity, the Fund has gradually been extended even to cases in which there is no prospect of a return to the normal production and work pattern, so that it has in fact become a welfare instrument for the management of labour surpluses (see labour surplus/overstaffing ).

The more recent Law No. 223/1991 did, however, seek to restore the Fund to its original function of providing assistance during purely temporary labour surpluses. It imposed a rigid time-limit on eligibility for making up lost pay, and recourse to special availability-for-employment and workforce-reduction procedures in cases where the surplus is structural or there is no prospect of re-employing the surplus employees (see labour mobility , collective dismissal/redundancy ). This objective has only partially been achieved, because as a result of the serious economic crisis suffered by Italy from 1992 onwards the legislators have intervened to modify the legal rules governing the Fund's operation, both extending the time-limit on eligibility for special intervention to make up pay and extending such eligibility to areas where it was formerly excluded. In particular, special intervention is now also available to commercial enterprises with more than 50 employees, to artisanal enterprises whose main customers are enterprises experiencing serious economic difficulties, to agricultural and stock-rearing co-operatives and to catering and restaurant enterprises.

The Fund also operates, under separate regulations similar to those governing its ordinary intervention, in the construction and agricultural sectors.

Please note: the European industrial relations glossaries were compiled between 1991 and 2003 and are not updated. For current material see the European industrial relations dictionary.